In Australia, various kinds of business are functioning in the financial market. All these types of businesses have their own purposes to serve in the market. Due to the Corona pandemic in current times, the businesses have now been classified into two categories i.e. Essential businesses and Non-essential businesses. Broadly, there are 4 types of businesses that may or are functioning in the financial market of Australia. Each business has a different set of rules for registration and functioning in the Australian Market (Kent 2018). This report covers the details of different kinds of businesses in Australia along with the information of the regulators of the Australian financial market and analysis of risk in project evaluation. 3 of these businesses have been discussed and compared on the basis of certain criteria in the succeeding part of the report.
Part 1: Australian Financial Market
Fundamental Principles of Finance
For the setting up of business, it is considered that finance tends to play an important role as it is required for the accommodation of effective allocation of the required resources (Smales 2016). The finance principles help in determining a proper way of investment using the guidelines and also help in making financial decisions more accurately. So, some of the important principles of finance have been mentioned hereunder:
Value of Money changes with Time: This principle says that the money earned by the company today has more value than the money that will be earned ahead in the future. So to maximize the income, investment of finance can be made. There has been an increase in the rate of inflation due to the increasing price of products & services. Example- The COVID-19 pandemic has resulted in increment of prices in retail shops, which might result in consumers avoid purchasing or minimize their expense in the future.
Connection of risk & reward: If the person is earning more reward by taking the risk, he will start taking more risks in order to increase his rewards. This principle states that taking a heavy risk in the greed of more reward will be a wastage of resources, he receives less than he has calculated to earn. Example- During this COVID-19 pandemic, all the doctors are ready to treat patients realizing that they are at risk of losing their life too. But they continue to do so for earning money as well as respect in the name of reward.
Investment Diversification: There is another important aspect of finance that is needed to be involved in the account smartly. It is noticed that dividing the investment & risk of different firms can deduct the number of investors' risk overall. For e.g., in the situation of the BHP a business invests in the oil share trade & if, by chance, there is the reduction of oil in the trade-in 2020 because of the epidemic all holdings of the oil company gets affected. Hence, it is decided that one can diversify its holdings into a few other streams. It could give stability to the firm.
Financial markets are important in securities pricing: As per the principle, the trade tends to act according to the news of a firm, evaluation, supply, and demand & other factors. Keeping in mind the aspects of history, this principle may not result in good for the shareholders. Example: Due to increasing inflation, the price of shares in the sector of automobiles experienced a fall, but it is said that efficient finance can help in maintaining the BOP as it changes from time to time (Becker and Rickards 2017).
The difference of objectives: With the point of view of practical knowledge, it is concluded that the managers seem to have a better knowledge of helping the organization reach its goals. Whereas the shareholders focus on increasing the stock value so that stocks can be sold by the investors at the highest price. Example: Aldi Supermarket's price of the share has been fallen due to the on-going pandemic, so to avoid maximizing loss they have determined to lower the price of their products.
Part 2: Regulators of Australian Financial Market
2.1. Facts on trading over ASX
A. The detail presented on the website of ASX and provided data involves IRESS. The current data might present that it is the right of the company to show obligations to remind the confidential information of the market of ASX. Given below are five details related to the market:
a) ASX will not be able to disclose the announcement of the market which would be available on the website of ASX
b) It is possible to make available the information by the outsiders constructed by the market resumes of ASX
c) The bodies related to it cooperate & suppliers do not accept any responsibility for the claim
d) It directs news from the agencies of the government and tends to consider the regulators
B. According to the shareholders who are entitled to receive a share in profit will receive the dividend as a reward. Mostly the companies in ASX pay the dividend two times a year.
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